Caterpillar: Catalyst for a billion-dollar impact

Sunday

Dec 30, 2012 at 10:05 PM

Nick Coltrain

WRITER'S NOTE: When discussions of the most significant news event of the year began, one immediately leapt to the top: Caterpillar's winter announcement that it would move a factory from Japan to the Athens area. Fourteen-hundred jobs will be created over the next several years. Double that will come as ancillary businesses and companies build or relocate. Some $200 million will be spent on the mile-around facility. A conservative estimate puts its economic impact on the region at $1.4 billion a year. Another estimate, cited by Caterpillar, puts it at $2.4 billion a year. Either way, that kind of footprint, and the reverberations it will have throughout the region and state, puts it at the top of the local news items in a year chock full of contenders.

Whenever state and local officials talked economic development this year, the word "Caterpillar" wasn't too far from their lips.

At the end of November, when Gov. Nathan Deal spoke at the annual Georgia Economic Outlook series in Atlanta, he cited it as an example of the state's Department of Economic Development fulfilling its mission, despite the hangover of the Great Recession.

"(The Caterpillar manufacturing plant in Athens-Clarke and Oconee counties) is an excellent example of the work that our Department of Economic Development is doing," Deal said then to an auditorium full policymakers, business leaders and academics. "And I tell you that one of the characteristics of that facility is the fact that this is not just the relocation of plant from one part of the United States to another. It is the relocation of a plant in Japan to the mainland, and part of the mainland that was chosen was the state of Georgia.

"I consider that a high compliment to all of us. We want to continue to build on that framework."

The plant will build small hydraulic excavators and track-type tractors, with plans for the first machines to roll off the lines in late 2013. Caterpillar plans to hire 1,400 people - almost doubling its Georgia workforce - to work at the million-square-foot plant.

The Illinois-based company is investing $200 million to build the plant, and plans to spend $57 million on its payroll each year. Between incidental spending and suppliers moving to be closer to the factory, estimates have an additional 2,800 jobs sprouting from it as well.

All told, Selig Center for Economic Growth Director Jeffrey Humphreys predicted its annual economic impact would soar to $1.4 billion, with $33 million in annual state and local tax revenue, according to The Atlanta Journal-Constitution.

But getting the plant on to the 860-acre Orkin tract that straddles the western borders of Athens-Clarke and Oconee counties wasn't free: Local governments pledged $17.6 million in property and infrastructure improvements and an estimated $12.4 million in tax abatements over 20 years. State incentives are valued at about $45 million.

"I think (Caterpillar) leaps to everybody's mind" when discussing the most noteworthy events of 2012, Athens-Clarke County Mayor Nancy Denson said. But she also cautioned against letting it overshadow other economic development activity in the area, not the least of which was the announcement of Ethicon's expansion into Athens. The suture manufacturer, a subsidiary of Johnson & Johnson, is building a 100,000-square-foot facility in Athens-Clarke County on the property of sister company Noramco. It is expected to invest $185 million and add 75 jobs through 2016.

Denson jokes that those two developments can be called "the reverse broken window syndrome" - a reference to the theory of criminal activity that small problems, such as broken windows, eventually lead to bigger crimes.

"I don't think there's going to be bigger things or better things for us (in 2013), but I think we're going to see a lot of investment in our community," Denson said.

It's a prediction that could be argued is already coming true, with tax credits helping a $14 million redevelopment of the Jack R. Wells neighborhood get off the ground and new medical offices either open for business or being built up on the West Broad Street corridor.

Doc Eldridge, president of the Athens Area Chamber of Commerce, predicts the Caterpillar plant will be a catalyst for more movement in the area and in the region.

"It should be a real shot in the arm for retail and commercial development," Eldridge said.

Only landmarks on the education side - the University of Georgia opening a health sciences campus in Normaltown, and adding an engineering department on its main campus, could possibly top the Caterpillar announcement as major stories of 2012, in Eldridge's mind.

"When they (Caterpillar) made the announcement last year, I don't remember there being that kind of electricity since Herschel Walker and the (University of Georgia's) 1980 national (football) championship," he said.

Oconee County Commission Chairman Melvin Davis spoke simply when asked if anything tops Caterpillar in terms of impact for his county.

"No. Nothing at all," he said. The 40-year Oconee resident remembers needing to travel into Athens for everything at one point - work, the doctor, even groceries. But as Caterpillar's billion-dollar footprint reverberates through the area, he expects U.S. Highway 78 to look completely different from how it does today, and he also expects to watch businesses sprout along Georgia Highway 316.

There will be "nothing more significant to changing the face of Oconee County than Caterpillar," at least in the foreseeable future, Davis said.

He also expects the investment to mean sales tax revenue will double in Oconee County in the next three years, maybe taking some of the load off property owners in his county as out-of-town workers stop for gas or spend money elsewhere in Oconee.

And while Davis and others have their most vested interests in their home counties, all note that the impact will be felt far outside their border.

"This is not only a good Athens and Oconee County development," Eldridge said. "This is a good regional development. People will benefit all over Northeast Georgia."

• Follow government and business reporter Nick Coltrain at twitter.com/ncoltrain or on Facebook at facebook.com/NickColtrainABH.

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